Shufersal Ltd. (TASE:SAE), Israel's largest market company, has taken steps towards the spinning off of its real estate assets: it has filed an application for the spin off with the tax authorities, and it has signed an agreement with the new company which will acquire the assets at the beginning of April - Shufersal Real Estate Ltd.
Shufersal, a unit of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, will transfer to Shufersal Real Estate 68 supermarkets, with a value of NIS 1.7 billion, which Shufersal books at a value of NIS 1 billion. It will also transfer 16 investment properties, with a value of NIS 380 million, and five supermarkets under construction at a cost of NIS 46 million.
Shufersal Real Estate will also assume part of Shufersal's debt on its properties, estimated at NIS 700-800 million. The exact figure will be determined close to the full-year financial statements for 2013. Shufersal estimates the cost of the spin-off at NIS 20 million, which it will report in its financial statements for the first half of 2013.
Shufersal also signed leases for the supermarkets with Shufersal Real Estate. Rent will total NIS 130 million a year, beginning in April. Most supermarkets will be leased for twelve years, with two options to extend, while some supermarkets will be leased for five years, with four options to extend.
Shufersal has invested hundreds of millions of shekels in real estate assets in recent years, with the objective of spinning off the business at a higher value. Closing the deal is subject to a deal with the Tax Authority, because the spin-off is being carried out as a transaction exempt from income and betterment taxes. One of the conditions is that Shufersal Real Estate will remain a wholly-owned subsidiary of Shufersal for the next two years.
Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2013
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